In today’s briefing:
- If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
- Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- EOFlow (294090 KS): Suitably Pumped
- FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling
- Henlius Biotech (2696 HK): Fosun Offer?
- Henlius (2696 HK): Privatisation by Fosun Pharma?
- EM Watch: Have Copper markets been hit by a bus full of tourists or by the Chinese economy?
- Shift Up IPO – The Positives – All Games Have Done Well
- NIFTY50 Index Rebalance Preview: Two High Probability Changes in September; Adds Are Flying
- Ohayo Japan | Worst Day of 2024
If Rakuten (4755) Combines Financial Units… Who Wins and How? Well… It’s Complicated
- A couple of years ago, Rakuten (4755 JP) – burning through cash to start its mobile business – announced it would its Bank and Securities units. Bank listed. Securities didn’t.
- Mizuho ended up buying 49% of Securities. Today, it was announced there would be discussions to put Bank, Securities, Card, and Insurance in a new listed Holdco.
- How this works will end up being complicated. More complicated than it should be. But the complexity would make this more of a win-win for everyone.
Activist Palliser Re-Engages on Keisei Electric (9009) But The Oppty Remains Unconvincing
- Last October, activist Palliser Capital launched a campaign (presentation) on well-known “stub trade” Keisei Electric Railway Co (9009 JP) with a stake of about 1.6%.
- The proposal? Monetise a decent stake in Oriental Land (4661 JP), repurchase shares, and invest for growth. Keisei responded 6-8 weeks ago with a buyback and 1% OLC stake sale.
- I thought that was time to bail. That was it. But now, Palliser has re-engaged. Today a press release (Japanese/English) and a Letter to the Board.
EOFlow (294090 KS): Suitably Pumped
- For a company that strives to improve people’s lives, investors in EOFlow (294090 KS) shares have mostly faced a world of pain over the past year.
- After Insulet Corp (PODD US) filed a lawsuit on the 8th August 2023, accusing EOFlow of misappropriating trade secrets, patent infringement, and trademark dilution, shares declined ~88% by year-end.
- Earlier this month, the courts quashed Insulet’s preliminary injunction. EOFlow is up 200%. Insulet is up 3% (?). And Medtronic (MDT US), EOFlow’s prior suitor, is no doubt weighing options.
FSS Head Lee Made an Urgent TV Appearance Today to Discuss the Resumption of Short Selling
- Lee urgently appeard on TV today and said, “In June, we will explain whether and when short selling will be resumed, and what criteria we might use for the resumption.”
- He noted considering flexible partial short selling resumption even if only some conditions are met, contrasting the Presidential Office’s stance from two days ago.
- Presidential Office led short selling ban, now likely under FSC/FSS jurisdiction for resumption.
Henlius Biotech (2696 HK): Fosun Offer?
- Biopharmaceutical outfit Shanghai Henlius Biotech (2696 HK) is currently suspended pursuant to the Takeovers Code.
- Shanghai Fosun Pharmaceutical (Group) (2196 HK) holds ~60% in Henlius, mostly via domestic shares. Co-founders and Qatar Authority hold ~28% and 8% the H shares respectively.
- IF an Offer were to unfold, it would be the third in this space in the past two months, after Offers for Sciclone (6600 HK) and Yichang HEC (1558 HK),
Henlius (2696 HK): Privatisation by Fosun Pharma?
- Shanghai Henlius Biotech (2696 HK) entered a trading halt “pending the release of an announcement pursuant to the Code on Takeovers and Mergers.” The likely bidder is Fosun Pharma.
- A merger by absorption would require approval by at least 75% independent H Shareholders (<10% of all independent H Shareholders rejection). There could also be a 90% minimum acceptance condition.
- The shares are 62% below the IPO price. However, shareholders with blocking stakes would welcome an offer suggesting a 30-40% takeover premium would be sufficient.
EM Watch: Have Copper markets been hit by a bus full of tourists or by the Chinese economy?
- Copper markets have been on a tear in recent months and our assessment is that the positive sentiment started when Chinese copper stock data points started supporting the notion that China was “hoarding” Copper concentrate ahead of 1) a devaluation, 2) an overhaul of the electrical grid or 3) a power grab on supply chains for EVs, Solar Panels, Data centers and the likes.
- On top of this, we have seen how US officials have highlighted the option of creating a strategic reserve of Copper Cathode in the US, potentially in response to the stockpiling of refined copper seen in China (chart 1).
- Why is the Chinese copper stock not receding here? That is the question macro-managers and geopolitical pundits are asking themselves daily!
Shift Up IPO – The Positives – All Games Have Done Well
- Shift Up plans to raise up to US$320m in its upcoming South Korean IPO.
- Shift Up is a South Korean games developer, which as released three games so far for the global markets.
- In this note, we talk about the positive aspects of the deal.
NIFTY50 Index Rebalance Preview: Two High Probability Changes in September; Adds Are Flying
- Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) should replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
- Jio Financial Services (JIOFIN IN) and Zomato (ZOMATO IN) meet the free float market cap requirements but are not part of the F&O segment.
- Passive NIFTY Index (NIFTY INDEX) trackers will need to trade at least 3.8 days of ADV and 9 days of delivery volume on the index changes.
Ohayo Japan | Worst Day of 2024
- Nvidia surged 9.3% following strong earnings and a stock split announcement, but failed to buoy the broader market.
- A study by Japan’s Government Pension Investment Fund (GPIF) reveals that Japanese firms benefit from dialogue with investors, with positive impacts on market capitalization and performance indicators.
- Teijin (3401) Hong Kong’s Oasis Management disclosed ownership of 2.49% of Teijin’s shares, acquiring about 4.8 million shares, ranking seventh among major shareholders.
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